IBM Leaps Into HR Software With Kenexa Acquisition

By Ed Frauenheim

Aug. 27, 2012

Add computing giant IBM Corp. to the clash of the titans in the HR software arena.

IBM on Aug. 27 said it planned to acquire talent management software provider Kenexa Corp. for $1.3 billion. Big Blue portrayed the deal with Kenexa as part of its strategy to help companies make sense of “big data” and the emerging social business landscape.

But the move also puts IBM squarely in the human resources software ring with other big technology players: Oracle Corp. and SAP. Suddenly, the people-management arena has become a contest of some of the largest software companies.

SAP kicked off the intensified competition late last year, when it said it would snap up Kenexa rival SuccessFactors Inc. It closed that deal in February. Oracle followed suit by buying Taleo Corp. in April.

IBM now makes it three titans battling for talent management software market share, with a host of smaller vendors such as Inc., Infor, Kronos Inc., Workday Inc., Cornerstone OnDemand Inc. and Ultimate Software Group Inc. rounding out the field.

Talent management applications have been a hot area in recent years because the software helps companies maximize the value of employees. The category includes recruiting applications that match candidates with jobs, performance management tools that tie individual goals to company strategies and learning software systems that track employee skills and credentials.

Talent management vendors also have been building social networking capabilities into their systems and working to make it easy for companies to analyze all the people data they generate.

Kenexa offers a range of software and services, including recruiting tools and employee engagement survey products.

IBM has treaded into the HR technology world in the past with analytical software. It also has had an HR outsourcing business. The proposed Kenexa purchase now puts it in direct competition with other HR application vendors.

A recent IBM study found that 57 percent of CEOs identified social business as a top priority, more than 73 percent are making significant investments to draw insights into available data, and 70 percent cite human capital as the single biggest contributor to sustained economic value.

“Every company, across every business operation, is looking to tap into the power of social networking to transform the way they work, collaborate and out innovate their competitors,” Alistair Rennie, IBM’s general manager for social business said in a written statement. “IBM is uniquely positioned to help clients generate real returns from their social business investments, while helping them gain intelligence into the data being generated in these networks to be more competitive in their markets.”

IBM expects the transaction to close in the fourth quarter, subject to Kenexa shareholder and regulatory approvals and other customary closing conditions.

Wayne, Pennsylvania-based Kenexa has about 2,800 employees and operations in 21 countries worldwide. The company will be integrated into IBM’s Software and Services Groups, according to a Kenexa news release. IBM has made more than 25 acquisitions in the past three years, and closed eight acquisitions in 2012, the release stated.

Ed Frauenheim is a former Associate Editorial Director at Human Capital Media and currently works as Senior Director of Content at Great Place to Work. He is a co-author of A Great Place to Work For All.

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